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Former Siemens Executives and Agents Charged

In December 2008, Siemens resolved the largest ever (in terms of fines and penalties) FCPA enforcement action.  See here [1] and here [2].   A portion of the improper conduct focused on Argentina and allegations that Siemens S.A. (Argentina), and those acting on its behalf, engaged in a bribery scheme in connection with an Argentine government contract to produce national identity cards.

Since the 2008 enforcement action, U.S. enforcement authorities have been under pressure to charge culpable individuals.  See here [3] for a prior post and here [4] for the transcript of the November 2010 Senate FCPA hearing during which former Senator Specter again called for individual accountability, an occurrence which prompted him to ask me several questions after the hearing about the “most egregious examples of individual conduct associated with the Siemens prosecution.”  See here [5] for my responses.

Today, the DOJ announced that “eight former executives and agents of Siemens AG and its subsidiaries have been charged for allegedly engaging in a decade-long scheme to bribe senior Argentine government officials to secure, implement and enforce a $1 billion contract with the Argentine government to produce national identity cards.”

The defendants charged in the indictment (here [6]) are:  Uriel Sharef (a former member of the central executive committee of Siemens AG); Herbert Steffen (a former chief executive officer of Siemens Argentina); Andres Truppel (a former chief financial officer of Siemens Argentina); Ulrich Bock, Stephan Signer and Eberhard Reichert (former senior executives of Siemens Business Services); and Carlos Sergi and Miguel Czysch (who allegedly served as intermediaries and agents of Siemens in the bribe scheme).  None of the individuals are U.S. citizens and during a press conference today Assistant Attorney General Lanny Breuer indicated that none of the defendants are in U.S. custody.

The indictment, filed in the Southern District of New York, charges the defendants and their co-conspirators with conspiracy to violate the FCPA and the wire fraud statute, money laundering conspiracy and wire fraud.

In the DOJ release, Assistant Attorney General Lanny Breuer stated as follows.  “Today’s indictment alleges a shocking level of deception and corruption.  The indictment charges Siemens executives, along with agents and conduits for the company, with committing to pay more than $100 million in bribes to high-level Argentine officials to win a $1 billion contract.  Business should be won or lost on the merits of a company’s products and services, not the amount of bribes paid to government officials.  This indictment reflects our committment to holding individuals, as well as companies, accountable for violations of the FCPA.”  During the press conference, Breuer stated that today’s action is the “first time a former Board member of a Fortune 50 company” has ever been charged with FCPA violations.  Breuer also stated that  “Siemens was a remarkably cooperative and helpful party throughout our investigation.”

In a parallel civil enforcement action also announced today (here [7]), the SEC charged seven former Siemens executives with violating the FCPA for their involvement in the same bribery scheme.  The following individuals are charged in the civil action:  Sharef, Bock, Signer, Steffen, Truppel, Sergi and Bernd Regendantz (a former chief financial officer of Siemens Business Services).  The civil complaint (here [8]) alleges FCPA anti-bribery violations, aiding and abetting Siemens’ FCPA anti-bribery violations, as well as other charges.  Robert Khuzami (Director of the SEC’s Division of Enforcement) stated as follows.  “Business should flow to the company with the best product and the best price, not the best bribe.  Corruption erodes public trust and the transparency of our commercial markets, and undermines corporate governance.”  During today’s press conference, Khuzami called the action the “largest [SEC] action ever against individuals” in the FCPA’s history.

Additional analysis of the DOJ and SEC enforcement actions will follow.